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CHAPTER 13 Quiz A Business Statistics, 2nd ed 13-1
1. A company manufacturing computer chips finds that 8% of all chips manufactured are
defective. Management is concerned that high employee turnover is partially responsible
for the high defect rate. In an effort to decrease the percentage of defective chips,
management decides to provide additional training to those employees hired within the
last year. After training was implemented, a sample of 450 chips revealed only 27
defects. Was the additional training effective in lowering the defect rate?
2. A company that sells eco-friendly cleaning products is concerned that only 19.5% of
people who use such products select their brand. A marketing director suggests that the
company invest in new advertising and labeling to strengthen its green image. The
company decides to do so in a test market so that the effectiveness of the marketing
campaign may be evaluated.
b. In this context, describe the Type I error possible. How might such an error impact the
company?
c. In this context, describe the Type II error possible. How might such an error impact
the company?
d. Based on data collected in the test market, the company constructed a 98% confidence
interval for the proportion of all consumers who might buy their brand. The resulting
interval is 16% to 28%. What conclusion should the company reach about the new
marketing campaign? Explain.
3. A large software development firm recently relocated its facilities. Top management
is interested in fostering good relations with their new local community and has
encouraged their professional employees to engage in local service activities. They
believe that the firm’s professionals volunteer an average of more than 15 hours per
month. If this is not the case, they will institute an incentive program to increase
community involvement. A random sample of 24 professionals reported the following
number of hours:
12 13 14 14 15 15 15 16 16 16 16 16
17 17 17 18 18 18 18 19 19 19 20 21
The sample has a mean of 16.6 hours and a standard deviation of 2.22 hours.
b. In this context, describe the Type I error possible. How might such an error impact the
software development firm?
c. In this context, describe the Type II error possible. How might such an error impact
the software development firm?
1. A company manufacturing computer chips finds that 8% of all chips manufactured are
defective. Management is concerned that high employee turnover is partially responsible
for the high defect rate. In an effort to decrease the percentage of defective chips,
management decides to provide additional training to those employees hired within the
last year. After training was implemented, a sample of 450 chips revealed only 27
defects. Was the additional training effective in lowering the defect rate?
z = -1.56
P-value = 0.0594
At α = .01 we fail to reject the null hypothesis. At the .01 level of significance, we
cannot conclude that the additional training significantly lowered the defect rate.
2. A company that sells eco-friendly cleaning products is concerned that only 19.5% of
people who use such products select their brand. A marketing director suggests that the
company invest in new advertising and labeling to strengthen its green image. The
company decides to do so in a test market so that the effectiveness of the marketing
campaign may be evaluated.
b. In this context, describe the Type I error possible. How might such an error impact the
company?
A Type I error would be concluding that the percentage of customers purchasing the
company’s brand has increased, when in fact it has not. The company would waste
money on a new marketing campaign that does not increase the percentage of customers
buying their brand.
c. In this context, describe the Type II error possible. How might such an error impact
the company?
d. Based on data collected in the test market, the company constructed a 98% confidence
interval for the proportion of all consumers who might buy their brand. The resulting
interval is 16% to 28%. What conclusion should the company reach about the new
marketing campaign? Explain.
The 98% confidence interval contains the hypothesized value of 19.5%. Therefore, at a
significant level of α = .02, the data do not provide convincing evidence that the
marketing campaign increases the percentage of customers for the company’s products.
3. A large software development firm recently relocated its facilities. Top management
is interested in fostering good relations with their new local community and has
encouraged their professional employees to engage in local service activities. They
believe that the firm’s professionals volunteer an average of more than 15 hours per
month. If this is not the case, they will institute an incentive program to increase
community involvement. A random sample of 24 professionals reported the following
number of hours:
12 13 14 14 15 15 15 16 16 16 16 16
17 17 17 18 18 18 18 19 19 19 20 21
The sample has a mean of 16.6 hours and a standard deviation of 2.22 hours.
H0 : µ = 15 and HA : µ > 15
b. In this context, describe the Type I error possible. How might such an error impact the
software development firm?
A Type I error would be concluding that the average number of hours volunteered by the
firm’s professional employees is more than 15 hours, when in fact it is not. The firm
would miss an opportunity to increase community involvement among its professional
employees.
c. In this context, describe the Type II error possible. How might such an error impact
the software development firm?
A Type II error would be failing to detect that the average number of hours volunteered
by the firm’s professional employees is more than 15 hours, when in fact it is. The firm
t = 16.6 – 15
2.22 / √24
t = 3.532
P-value = 0.0009
We reject the null hypothesis. The firm shouldn’t need to institute an incentive program
because the evidence indicates that professional employees volunteer an average of more
than 15 hours per month in their local community.
1. A report on the U.S. economy indicates that 28% of Americans have experienced
difficulty in making mortgage payments. A news organization randomly sampled 400
Americans from 10 cities named the “fastest dying cities in the U.S.” (Forbes Magazine,
August 2008) and found that 136 reported such difficulty. Does this indicate that the
problem is more severe among these cities?
b. In this context, describe the Type I error possible. How might such an error impact the
company?
c. In this context, describe the Type II error possible. How might such an error impact
the company?
d. Based on data collected after the trial period, the company constructed a 95%
confidence interval for the proportion of all employees open to new ideas and approaches
toward their work. The resulting interval is 18% to 22%. What conclusion should the
company reach about the seminars? Explain.
86 75 83 84 81 77 78 79 79 81
76 85 70 76 79 81 73 74 72 83
b. In this context, describe the Type I error possible. How might such an error impact
ABI Insurance?
c. In this context, describe the Type II error possible. How might such an error impact
ABI Insurance?
1. A report on the U.S. economy indicates that 28% of Americans have experienced
difficulty in making mortgage payments. A news organization randomly sampled 400
Americans from 10 cities named the “fastest dying cities in the U.S.” (Forbes Magazine,
August 2008) and found that 136 reported such difficulty. Does this indicate that the
problem is more severe among these cities?
z = 2.67
P-value = .0038
At α = .05 we reject the null hypothesis. At the .05 level of significance, we can
conclude that the percentage of Americans in these cities experiencing difficulty making
mortgage payments is significantly higher than 28% (or that the problem is more severe).
b. In this context, describe the Type I error possible. How might such an error impact the
company?
A Type I error would be concluding that the percentage of employees open to new ideas
has increased, when in fact it has not. The company would waste money on seminars that
do not increase the percentage of employees with more innovative attitudes.
c. In this context, describe the Type II error possible. How might such an error impact
the company?
d. Based on data collected after the trial period, the company constructed a 95%
confidence interval for the proportion of all employees open to new ideas and approaches
toward their work. The resulting interval is 18% to 22%. What conclusion should the
company reach about the seminars? Explain.
The 95% confidence interval contains values that are all above the hypothesized value of
15%, so the data provide convincing evidence (at α = .05) that the seminars improved
employee’s attitudes toward innovativeness and change.
86 75 83 84 81 77 78 79 79 81
76 85 70 76 79 81 73 74 72 83
H0 : µ = 77 and HA : µ > 77
b. In this context, describe the Type I error possible. How might such an error impact
ABI Insurance?
A Type I error would be concluding that the average life expectancy has increased, when
in fact it has not. The company would change its premium structure when it was not
necessary.
c. In this context, describe the Type II error possible. How might such an error impact
ABI Insurance?
A Type II error would be failing to detect an increase in the average life expectancy,
when in fact it has. The company would miss an opportunity to change its premium
structure when it was necessary.
t = 78.6 – 77
4.48 / √20
t = 1.597
P-value = .063
We fail to reject the null hypothesis. ABI Insurance shouldn’t need to increase their
premiums because there is little evidence to indicate an increase in average life
expectancy.
A. z = -1.56
B. z = -2.57
C. z = 1.56
D. z = 1.96
E. z = -2.57
A. we can conclude that the additional training significantly lowered the defect rate.
B. we can conclude that the additional training did not significantly lower the defect
rate.
C. we can conclude that the additional training significantly increased the defect rate.
D. we can conclude that the additional training did affect the defect rate.
E. None of the above.
A. occurs when they conclude that the percentage of customers purchasing the
company’s brand has increased when in fact it has not.
B. occurs then they conclude that the percentage of customers purchasing the
company’s brand has not increased when in fact it has.
C. would result in the company wasting money on a new marketing campaign that does
not increase the percentage of customers buying their brand.
D. Both A and C.
E. Both B and C.
A. The data do not provide convincing evidence that the marketing campaign increases
the percentage of customers for the company’s products.
B. The data do provide convincing evidence that the marketing campaign increases the
percentage of customers for the company’s products.
C. The new marketing campaign is effective in increasing the percentage of customers
buying their brand.
D. The company should launch the new marketing campaign.
E. None of the above.
A. ± 1.96
B. ±2.575
C. -1.645
D. ±1.645
E. 1.96
A. H0 : µ = 15 and HA : µ < 15
B. H0 : µ = 15 and HA : µ > 15
C. H0 : µ = 15 and HA : µ ≠ 15
D. H0 : µ ≠ 15 and HA : µ = 15
E. H0 : µ < 15 and HA : µ > 15
A. t = 3.532
B. t = -3.532
C. t = 1.223
D. t = -1.223
E. t = 0.789
A. they failed to detect that the average number of hours volunteered by the firm’s
professional employees is more than 15 hours when in fact it is.
B. they would decide not to institute an incentive program to increase community
involvement when they should have.
C. they would waste money instituting an incentive program to increase community
involvement among its professional employees that was not needed.
D. Both A and B.
E. Both A and C.
1. C
2. A
3. B
4. D
5. A
6. B
7. B
8. A
9. D
10. E
A. p = 0.15
B. p > 0.15
C. p < 0.15
D. µ > 0.15
E. µ ≠ 0.15
A. H0 : µ = 77 and HA : µ > 77
B. H0 : µ = 77 and HA : µ < 77
C. H0 : µ = 77 and HA : µ ≠ 77
D. H0 : p = 77 and HA : p > 77
E. H0 : p = 15 and HA : p < 77
A. 1.896
B. 2.355
C. 1.987
D. 2.176
E. 1.597
1. A
2. C
3. A
4. B
5. D
6. C
7. B
8. A
9. E
10. D
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